1

LSM733-PRODUCTION OPERATIONS MANAGEMENT

By: OSMAN BIN SAIF

LECTURE 9

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Global Company Profile: Arnold Palmer Hospital

Quality and Strategy Defining Quality

Implications of QualityMalcolm Baldrige National Quality

AwardCost of Quality (COQ)Ethics and Quality Management

Summary of last session

3

International Quality Standards ISO 9000 ISO14000

Summary of last session (Contd.)

4

Total Quality ManagementContinuous ImprovementSix SigmaEmployee EmpowermentBenchmarkingJust-in-Time (JIT)Taguchi ConceptsKnowledge of TQM Tools

Summary of last session (Contd.)

5

Tools of TQMCheck SheetsScatter Diagrams Cause-and-Effect DiagramsPareto ChartsFlowchartsHistogramsStatistical Process Control (SPC)

Agenda for this session

6

The Role of InspectionWhen and Where to InspectSource InspectionService Industry Inspection Inspection of Attributes versus

Variables

TQM in Services

Agenda for this session (Contd.)

7

Tools for Generating IdeasCheck sheetsScatter diagramsCause-and-effect diagrams

Tools to Organize the DataPareto chartsFlowcharts

Tools for Identifying ProblemsHistogramStatistical process control chart

Agenda for this session (Contd.)

8

//

/ / /// /// ///// ////

//////

HourDefect 1 2 3 4 5 6 7 8

ABC

////

/

Seven Tools of TQM(a) Check Sheet: An organized method of recording data

Figure 6.6

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Seven Tools of TQM(b) Scatter Diagram: A graph of the value of one variable

vs. another variable

Absenteeism

Pro

duct

ivity

Figure 6.6

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Seven Tools of TQM(c) Cause-and-Effect Diagram: A tool that identifies process

elements (causes) that might effect an outcome

Figure 6.6

Cause

Materials Methods

Manpower Machinery

Effect

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Seven Tools of TQM(d) Pareto Chart: A graph to identify and plot problems or defects

in descending order of frequency

Figure 6.6

Fre

que

ncy

Pe

rce

nt

A B C D E

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Seven Tools of TQM(e) Flowchart (Process Diagram): A chart that describes the steps

in a process

Figure 6.6

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Seven Tools of TQM(f) Histogram: A distribution showing the frequency of occurrences

of a variable

Figure 6.6

Distribution

Repair time (minutes)

Fre

que

ncy

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Seven Tools of TQM(g) Statistical Process Control Chart: A chart with time on the

horizontal axis to plot values of a statistic

Figure 6.6

Upper control limit

Target value

Lower control limit

Time

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Cause-and-Effect DiagramsMaterial

(ball)Method

(shooting process)

Machine(hoop &

backboard)

Manpower(shooter)

Missed free-throws

Figure 6.7

Rim alignment

Rim size

Backboard stability

Rim height

Follow-through

Hand position

Aiming point

Bend knees

Balance

Size of ball

Lopsidedness

Grain/Feel (grip)

Air pressure

Training

Conditioning Motivation

Concentration

Consistency

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Pareto Charts

Number of occurrences

Room svc Check-in Pool hours Minibar Misc.72% 16% 5% 4% 3%

12

4 3 2

54

– 100– 93– 88

– 72

70 –

60 –

50 –

40 –

30 –

20 –

10 –

0 –

Fre

quen

cy (

num

ber)

Causes and percent of the total

Cum

ulat

ive

perc

ent

Data for October

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Flow Charts

MRI Flowchart1. Physician schedules MRI2. Patient taken to MRI3. Patient signs in4. Patient is prepped5. Technician carries out MRI6. Technician inspects film

7. If unsatisfactory, repeat8. Patient taken back to room9. MRI read by radiologist10. MRI report transferred to

physician11. Patient and physician discuss

11

10

20%

9

880%

1 2 3 4 5 6 7

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Statistical Process Control (SPC)

Uses statistics and control charts to tell when to take corrective action

Drives process improvement Four key steps

Measure the process When a change is indicated, find the assignable cause Eliminate or incorporate the cause Restart the revised process

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An SPC Chart

Upper control limit

Coach’s target value

Lower control limit

Game number

| | | | | | | | |

1 2 3 4 5 6 7 8 9

20%

10%

0%

Plots the percent of free throws missed

Figure 6.8

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Inspection Involves examining items to see if an

item is good or defective Detect a defective product

Does not correct deficiencies in process or product

It is expensive Issues

When to inspectWhere in process to inspect

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When and Where to Inspect

1. At the supplier’s plant while the supplier is producing

2. At your facility upon receipt of goods from the supplier

3. Before costly or irreversible processes4. During the step-by-step production process5. When production or service is complete6. Before delivery to your customer7. At the point of customer contact

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Inspection Many problems

Worker fatigueMeasurement errorProcess variability

Cannot inspect quality into a product Robust design, empowered

employees, and sound processes are better solutions

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Source Inspection

Also known as source control The next step in the process is

your customer Ensure perfect product

to your customer

Poka-yoke is the concept of foolproof devices or techniques designed to pass only acceptable product

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Service Industry Inspection

Organization What is Inspected Standard

Jones Law Office Receptionist performance

Billing

Attorney

Is phone answered by the second ring

Accurate, timely, and correct format

Promptness in returning calls

Table 6.5

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Service Industry Inspection

Organization What is Inspected Standard

Hard Rock Hotel Reception desk

Doorman

Room

Minibar

Use customer’s name

Greet guest in less than 30 seconds

All lights working, spotless bathroom

Restocked and charges accurately posted to bill

Table 6.5

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Service Industry Inspection

Organization What is Inspected Standard

Arnold Palmer Hospital

Billing

Pharmacy

Lab

Nurses

Admissions

Accurate, timely, and correct format

Prescription accuracy, inventory accuracy

Audit for lab-test accuracy

Charts immediately updated

Data entered correctly and completely

Table 6.5

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Service Industry Inspection

Organization What is Inspected Standard

Olive Garden Restaurant

Busboy

Busboy

Waiter

Serves water and bread within 1 minute

Clears all entrée items and crumbs prior to dessert

Knows and suggest specials, desserts

Table 6.5

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Service Industry Inspection

Organization What is Inspected Standard

Nordstrom Department Store

Display areas

Stockrooms

Salesclerks

Attractive, well-organized, stocked, good lighting

Rotation of goods, organized, clean

Neat, courteous, very knowledgeable

Table 6.5

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Attributes Versus Variables

Attributes Items are either good or bad, acceptable or

unacceptable Does not address degree of failure

Variables Measures dimensions such as weight, speed,

height, or strength Falls within an acceptable range

Use different statistical techniques

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TQM In Services

Service quality is more difficult to measure than the quality of goods

Service quality perceptions depend on Intangible differences between products Intangible expectations customers have

of those products

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Service Quality

The Operations Manager must recognize:

1. The tangible component of services is important

2. The service process is important

3. The service is judged against the customer’s expectations

4. Exceptions will occur

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ServiceSpecifications

at UPS

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Determinants of Service Quality

Reliability Responsiveness Competence Access Courtesy Communication

Credibility Security Understanding/

knowing the customer

Tangibles

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Service Recovery Strategy

Managers should have a plan for when services fail

Marriott’s LEARN routine Listen Empathize Apologize React Notify

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36

Dell Computer CompanyMass customization provides a competitive

advantage

Sell custom-built PCs directly to consumer Lean production processes and good product

design allow responsiveness Integrate the Web into every aspect of its business Focus research on software designed to make

installation and configuration of its PCs fast and simple

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Process, Volume, and Variety

Process Focusprojects, job shops

(machine, print, carpentry)

Standard Register

Repetitive(autos, motorcycles)

Harley-Davidson

Product Focus(commercial baked goods, steel, glass)

Nucor Steel

High Varietyone or few units per run, high variety(allows customization)

Changes in Modulesmodest runs, standardized modules

Changes in Attributes (such as grade, quality, size, thickness, etc.) long runs only

Mass Customization(difficult to achieve, but

huge rewards)Dell Computer

Poor Strategy (Both fixed and variable

costs are high)

Low Volume

Repetitive Process

High Volume

VolumeFigure 7.1

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Process Strategies

How to produce a product or provide a service that Meets or exceeds customer requirements Meets cost and managerial goals

Has long term effects on Efficiency and production flexibility Costs and quality

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Process Strategies

Four basic strategies

Process focus Repetitive focus Product focus Mass customization

Within these basic strategies there are many ways they may be implemented

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Process Focus Facilities are organized around specific activities

or processes General purpose equipment and skilled

personnel High degree of product flexibility Typically high costs and low equipment

utilization Product flows may vary considerably making

planning and scheduling a challenge

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Process Focus

Many inputs

Many variety of outputs

Job Shop

Man

y de

part

men

ts a

nd

man

y ro

uting

s

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Accounting

Process Flow Diagram

Information flowMaterial flow

Figure 7.2

COLLATING DEPT GLUING, BINDING, STAPLING, LABELING

POLYWRAP DEPT

SHIPPING

Customer

PRINTING DEPT

PREPRESS DEPTVendors

Receiving

Warehouse

Purchasing

Customer

Customer sales representative

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Repetitive Focus

Facilities often organized as assembly lines Characterized by modules with parts and

assemblies made previously Modules may be combined for many

output options Less flexibility than process-focused

facilities but more efficient

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Repetitive Focus

Raw materials

and module inputs

Modules combined for many output options

Few modules

Automobile Assembly Line

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Process Flow Diagram

THE ASSEMBLY LINETESTING28 tests

Oil tank work cell

Shocks and forks

Handlebars

Fender work cell

Air cleaners

Fluids and mufflers

Fuel tank work cell

Wheel work cell

Roller testing

Incoming parts

From Milwaukee on a JIT arrival schedule

Engines and transmissions

Frame tube bending

Frame-building work cells

Frame machining

Hot-paint frame painting

Crating

Figure 7.3

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Product Focus

Facilities are organized by product High volume but low variety of products Long, continuous production runs enable

efficient processes Typically high fixed cost but low variable

cost Generally less skilled labor

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Product Focus

Few inputs

Output variations in size, shape,

and packaging

Continuous Work Flow

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Product FocusNucor Steel Plant

Conti

nuou

s ca

ster

Continuous cast steel sheared into 24-ton slabs

Hot tunnel furnace - 300 ft

Hot mill for finishing, cooling, and coiling

D

E F

GHI

Scrap steel

Ladle of molten steelElectric furnace

A

BC

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Mass Customization

The rapid, low-cost production of goods and service to satisfy increasingly unique customer desires

Combines the flexibility of a process focus with the efficiency of a product focus

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Mass Customization

Vehicle models 140 286Vehicle types 18 1,212Bicycle types 8 19Software titles 0 400,000Web sites 0 98,116,993Movie releases267 458New book titles40,530 77,446Houston TV channels 5 185Breakfast cereals160 340Items (SKUs) in 14,000 150,000 supermarketsLCD TVs 0 102

Number of ChoicesItem 1970s 21st Century

Table 7.1

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Mass Customization

Mass Customization

Effective scheduling techniques

Rapid throughput techniques

Repetitive FocusFlexible peopleand equipment

Process-FocusedHigh variety, low volume

Low utilization (5% to 25%)General-purpose equipment

Product-FocusedLow variety, high volume

High utilization (70% to 90%)Specialized equipment

Figure 7.5

Modular techniquesSupportive

supply chains

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Tools of TQMCheck SheetsScatter Diagrams Cause-and-Effect DiagramsPareto ChartsFlowchartsHistogramsStatistical Process Control (SPC)

Summary of this Session

53

The Role of InspectionWhen and Where to InspectSource InspectionService Industry Inspection Inspection of Attributes versus

Variables

TQM in Services

Summary of this Session (Contd.)

54

Tools for Generating IdeasCheck sheetsScatter diagramsCause-and-effect diagrams

Tools to Organize the DataPareto chartsFlowcharts

Tools for Identifying ProblemsHistogramStatistical process control chart

Summary of this Session (Contd.)

55

THANK YOU